The Problems with Heuristics for Law
Russell B. Korobkin
UCLA School of Law
February 1, 2004
UCLA School of Law, Law & Econ Research Paper No. 4-1
A large body of evidence, now familiar to the legal community,demonstrates that individual judgment and choice is often driven by heuristic-based reasoning as opposed to the pure optimization approach presumed by rational choice theory. The evidence of heuristic-based reasoning presents several challenges for consequentialist legal scholars who wish to make normative public policy recommendations. First, the fact that actors subject to the legal system often rely on heuristics suggests that their behavior will not always maximize their subjective expected utility, undermining the traditional assumptions of law-and-economics scholarship that private contracts are necessarily Pareto efficient and that legal taxes and subsidies can cause actors to behave in a way that maximizes social efficiency. Second, the fact that the decision makers who create law also rely on heuristics suggests that law will not necessarily maximize the desired ends of lawmakers, whether those ends are the collective good or the utility of favored groups, and that law that attempts to create incentives for certain behaviors might not be properly calibrated to its goal. Parts I and II of this essay describe these two problems that heuristics cause for law, and Part III considers steps that lawmakers can take to mitigate the problems. This essay was prepared for the June 2004 Dahlem Conference on Heuristics and the Law.
Number of Pages in PDF File: 18
Keywords: Heuristics, Bounded Rationality, Behavioral Law and Economics
Date posted: February 9, 2004
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